Liberalism’s darkest decade
Perhaps you are a boomer, currently outraged that millennials seem unable to understand that it’s not OK to sign a petition to have your boss fire one of your colleagues. You wonder what’s wrong with the younger generation. Have they no sense of basic human decency?
Or perhaps you are a member of the Greatest Generation, who were appalled that the young boomers reacted to all their sacrifices (WWII) and accomplishments (1960s prosperity) by becoming a bunch of drug addled hippies who rejected conventional morality.
But no generation was betrayed worse than the liberals of the late 19th century. In a period of 7 short years, a supposedly “liberal” president presided over the most appalling string of policy outrages in US history. Here are just some of the highlights:
1. In 1913, Wilson issued an order segregating the federal government. This was done so that whites would not have to suffer the supposed “indignity” of working next to blacks.
2. In 1913, Wilson signed the first income tax. At first, the tax was not that unreasonable. Most people didn’t have to pay any tax. The upper middle class and rich paid a 1% income tax, while the super rich paid 7%. But in the long run it became a monstrosity.
3. In 1913, Wilson signed the Federal Reserve Act, creating an institution with power to influence monetary policy but lacking the skill to do so wisely. The Fed played a major role in causing the Great Depression, which led directly to the success of the Nazis in Germany.
4. In 1914, Wilson signed the Harrison Act, which regulated (and later banned) narcotics. This led the the horrific War on Drugs, which has destroyed so many lives, and even entire countries.
5. In 1916, NYC enacted the nation’s first citywide zoning laws. The early rules (for things like setbacks) didn’t do much harm, but as with the income tax these laws eventually became very destructive.
6. In 1917, the US entered WWI. This tipped the balance against Germany, assuring that the most powerful country in Europe would lose the war. That made a rematch almost inevitable. Thus both the creation of the Fed and the US decision to enter WWI indirectly contributed to WWII and the Holocaust.
7. In 1917 and 1918, Wilson signed a series of laws that made it a crime to criticize the US decision to enter WWI. Free speech was effectively dead for the duration of the war.
8. To his credit, Wilson vetoed the Volstead Act in 1919, a law banning the sale of alcohol, but only because he objected to one narrow provision. It passed over his veto.
Some progressives might raise an eyebrow over my Fed and income tax views. To be clear, I’m not in the “Abolish the Fed” camp. The Fed we have today was basically created in 1935. The original Fed was a disaster, presiding over (and helping to cause) both the most unstable 20 years of monetary policy in US history and the worst banking crises. It was an utter failure. (Even the revised Fed has made serious mistakes, but it’s gradually learning from its errors.)
As far as the income tax, most of the harm done is not from the work disincentives (I favor a progressive consumption tax, which has basically identical work disincentives.) It’s not even the bias against future consumption (which hurts high savers like me.) Rather the biggest problems are the distortions it creates, the things people do to avoid paying taxes.
Thus the income tax deduction for health insurance has played a major role in pushing US spending on health care from 5% to 18% of GDP. And that plays a major role in reducing growth in our living standards.
Most people have a “follow the money” approach to economic analysis, whereas you actually want to follow the output. All the labor and materials going into that wasted 13% of GDP (above Singapore’s 5% of GDP) could have been used to provide average Americans with better housing, nicer cars, more restaurant meals and more trips to Disney World. Because we produce lots of medical goods that don’t make us happier, our living standards suffer.
As Noah Smith recently point out; it’s not so much about the money as it is about what we produce, and the ways in which we are making that production excessively costly. The income tax is far from the only problem, but its a big one. We should have a progressive consumption tax.
Progressives are feeling their oats right now, and I can’t blame them after the Trump fiasco. But this is the party that repealed a luxury tax a few decades back because they worried it was reducing output in the yacht making industry. (No, I’m not joking.) This is the party that at a local level often wants to stop big bad housing developers from building houses. Good intentions are not enough. If you don’t understand EC101, you aren’t going to be able to help anyone.
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10. February 2021 at 14:26
#6 is a stretch of great proportion. It was the Treaty of Versailles and the enormous reparations laid on Germany’s doorstep and not the US entry into the war that were responsible for WW II. There are enough books on this subject, but Margaret MacMillan’s is especially good on this. Don’t forget that Keynes was involved in all of this and warned of the impact of reparations.
I don’t see how the US Fed was involved at all in the lead up to WW II.
10. February 2021 at 15:04
re: “it’s not so much about the money as it is about what we produce”
As Dr. Lacy Hunt said “QE caused the corporate executives to switch funds from real capital investments into financial investments through the paying of higher dividends, buying shares of their own companies, and buying back their shares from others. While this type of action does produce a higher stock market; it doesn’t generate a higher standard of living.”
Wealth inequality stems from not putting the savings of the upper income quintiles (income not spent), back to work – by investing in targeted real investment outlets, e.g., capital goods.
Frictionless financial perpetual motion requires that, funds held beyond the income period in which received (commercial bank-held savings), is reintroduced into the economy, thereby sustaining and promoting economic momentum.
If a debt was acquired to finance the acquisition of a (1) [new-security], the proceeds of which are used to finance plant and equipment expansion, or the construction of a new house, rather than the purchase of an (2) [existing-security] or to finance the purchase of an existing house, or to finance (1) [inventory-expansion], rather than refinance (2) [existing-inventories].
The former types of investment are designated as (1) “REAL” [new construction] as contrasted to the latter (2), which constitute “FINANCIAL” investment [existing property].
FINANCIAL speculation provides a relatively insignificant demand for labor and materials and in some instances the over-all effects may actually be retarding to the economy.
Compared to REAL investment, FINANCIAL investment is rather inconsequential as a contributor to employment and production.
Only debt growing out of REAL investment or consumption makes an actual direct demand for labor and materials.
10. February 2021 at 15:32
Good post.
Moreover, I read a book a few years ago–I think it was this one:
https://www.amazon.com/1912-Roosevelt-Debs-Election-Changed/dp/0743273559–that convinced me that if I hadn’t known what Wilson would do, I would have voted for him in the 1912 election. He was the least bad of the 4 major candidates.
Re Alan Goldhammer’s point: You’re right about the Versailles Treaty but that treaty wouldn’t have been the same without the U.S. government tipping the scales in the war. Germany and Austria would have been in a much stronger position at a peace conference. So I think Scott’s #6 is right.
10. February 2021 at 15:48
Alan, On Versailles and the war debts, see David’s comment below. Without the US involvement, the war probably ends in a draw.
As for the Fed, their policies greatly contributed to the Great Depression, and the Nazis took power in 1933 precisely because Germany was hit hard by the global depression.
Thanks David. Regarding the 1912 election, there are many similar examples. LBJ was the candidate opposed to the Vietnam War in 1964. Al Gore was the more hawkish candidate in 2000.
10. February 2021 at 17:58
“But this is the party that repealed a luxury tax a few decades back because they worried it was reducing output in the yacht making industry.”
I understand this comment. The tax reduced yacht output and repealing increase it. What didn’t the Democrats understand?
10. February 2021 at 18:25
That’s interesting about the early Federal Reserve. If our preference order is
competent Fed > no Fed > incompetent Fed
then what should Wilson have done? How in those days do you get the former without suffering under the latter until they figured things out?
10. February 2021 at 20:01
“If you don’t understand EC101, you aren’t going to be able to help anyone.” But if most other people have a similar misunderstanding of EC101, you can quite successfully strike virtue-signaling poses (Minimum Wage, Family Leave, Wealth Tax, etc., etc.).
10. February 2021 at 21:45
Martin, I suspect the status quo is important.
If there’s no Fed, no need to introduce one.
If there is already a reasonably competent Fed, it’s less hassle to keep it.
Wilson should have copied sensible Canadian regulations. (Or lack thereof.)
11. February 2021 at 01:12
Q.E. and the stock market?
“If you separate out the top
06:22 five or six stocks from the US equity market and just look at how the other 490- something stocks
06:28 behave, they look, in some ways, more like the euro stock index, right? So they’ve been flat-ish
06:34 for the past decade or so, whereas the top five, six, seven, stocks have really lifted the whole
06:39 index. So if you separate those super companies out, there’s less of a difference in some ways.”
https://www.youtube.com/watch?v=7zfMQ5X3CzU
11. February 2021 at 01:20
Wealth inequality?
“Since the outbreak began, things have changed:
1. The rich have cut back on their spending in response to the economic shutdown.
2. This has stopped the flow of wages to working people, which means they cannot pay for their essentials.
3. In order to replace this income, central banks have given money to investors who have lent it to the government (taking a cut), who in turn have given it to working people.
4. Working people are now using this money to pay rents, mortgages, food and bills.
5. As before, money ends up with the owners of housing, the underlying lenders on loans, and the owners of corporations.
Who are the winners and losers here? Working people receive their incomes from the government, although they lose out a bit as their incomes are not fully subsidised. The rich also end up with the money they would have received anyway via rents, interest and corporate incomes. Crucially, however, the spending of the rich has decreased massively. This means that the rich end up profiting as their income has stayed the same but their outgoings have fallen.
At a basic level, the government has created new money to replace the lost spending of the rich, so that working people can continue to pay their bills to the rich. The new money that has been created by central banks ends up accumulating in rich individuals’ bank accounts, as shown in the diagram below.”
https://www.opendemocracy.net/en/oureconomy/following-coronavirus-money-trail/
11. February 2021 at 03:33
You left out the 1921 Immigration Act and the Red Scare.
I agree about the mistake of taxing income rather than consumption progressively, but the bigger problem was continuing to tax business income, a huge field for distortions of investment across sectors.
I find it strange to identify excessive health care spending with the income tax, however. Other countries that get better value per dollar from health care spending also have income taxes. Our Original Sin (not committed in your fatal decade) was was subsidizing health insurance through employment rather than directly with tax credits, related to financing Social Security and later Medicare with a wage tax rather than a consumption tax like the VAT.
11. February 2021 at 05:12
Actually, the Versailles-imposed reparations were not excessive from a historical economic perspective. It was more the seeming injustice of them that lead to problems, as hardliner Germans were able to spin the story that they were unfair.
11. February 2021 at 05:21
Interesting take.
11. February 2021 at 06:18
@David and Scott – Austria was pretty much a non-factor in WW-1 after the first year. They suffered some large defeats against Russia and were essential bailed out by Germany following Tannenburg. Germany was hopeful that Italy would enter the war on their side but they maintained neutrality. Yes, the US did not want to enter the war and was using the buffer of the Atlantic Ocean as a reason not to do so (this, and the Pacific Ocean had no buffer component in WW-2 as Pearl Harbor so glaringly showed).
The German decision to move into unrestricted submarine warfare drove the US into WW-1. From the viewpoint of history, it’s unclear whether or not the US would have entered the war in the absence of that. Germany was forced into this as Jutland pretty much destroyed their naval capacity other than U Boat warfare. The blockade was already resulting in commodity shortages and there was unrest beginning among the populace because of this. Trench warfare was pretty much a stalemate after 1915 and it is plain conjecture about whether the war would have been settled amicably without US intervention. My reading of history indicates a likely no. Both Britain and France were outraged over the incursion into Belgium that was part of German strategy. In the longer historical time line, US intervention had no effect at all on the political upheaval in Russia.
The evolving geopolitical situation in Germany post war is complex and there were factors other than reparations. My point stands, #6 is great stretch when one closely looks at history.
11. February 2021 at 07:40
Scott,
All and all, a pretty good list. I think 6 is up for debate. It’s not clear that the war was close to an end without the US entering. It’s also not clear that the war would have ended without one side imposing Versaille type conditions. And Germany already had some pretty nasty authoritarian roots growing. That said, the outcome with us entering was pretty bad.
I don’t disagree with you totally on the income tax, but I’m bothered by health care being your example. While removing tax incentives from our current system is the best logical next step, the original sin seems to be linking health insurance to employment in my opinion, which I link back to wage controls in WW2. I’m curious if you can provide an example of a country with a progress consumption tax that you would adopt?
Finally, I agree on the Fed, but do you think we could have made it through the 20th century without abandoning the gold standard? It seems to me that a 19th century type depression would result in more public pressure for a strong response.
Woodrow Wilson was a terrible president. As a Virginian, I’m glad New Jersey decided to claim him.
11. February 2021 at 09:34
Thank you Scott, you consistently write the most interesting, non-obvious opinion pieces I find anywhere. Connecting bits and pieces of history and thought across a longer sweep of time, even if one doesn’t agree with every point, is really refreshing, especially because your style is so good. Thanks again!
11. February 2021 at 13:02
“But this is the party that repealed a luxury tax a few decades back because they worried it was reducing output in the yacht making industry. (No, I’m not joking.)”
Not merely reducing output, but reducing TAX REVENUE (wrong side of the Laffer curve) per this vid from Reason (whom you cite in your next post):
https://www.youtube.com/watch?v=1WRDwCep25k
So it doesn’t seem like a mistake to repeal it, unless yachts are a negative externality and the tax is justified on Pigovian grounds (which might arguably be the case based on signalling competitions, as in Robert Frank’s theory of expenditure cascades).
11. February 2021 at 14:22
Jeff, They didn’t understand that the only way to tax the rich is to tax their consumption. If the money they pay comes out of investment or charity, then you are taxing someone else.
The whole point of taxing the rich is to reduce their consumption and increase the consumption of the lower classes. So then why complain when that happens?
Martin, They should have waited until the US left the gold standard, then set it up.
Thomas, You said:
“You left out the 1921 Immigration Act and the Red Scare.”
Good point, although the 1921 act was Harding, wasn’t it?
Tacticus, Yes, I’ve heard that too. I’m sort of agnostic on the issue. It was probably a mistake, but it’s not clear how much was reparations and how much was deflationary monetary policies.
Alan, Don’t forget that Germany settled with Russia in 1917, which gave them a boost. They had the bad luck (plus foolish decision on submarine warfare) to then face the US.
bb, You said:
“It’s not clear that the war was close to an end without the US entering.”
I agree, I just don’t see how Germany would have suffered a decisive defeat without the US. But I’m open to other points of view on that issue.
Yes, I think we would have left the gold stand before too long, at which time the Fed could have been created.
I’m not an expert on foreign income taxes, although I believe some places have exempted capital income to a large extent, which turns an income tax into a quasi consumption tax.
Thanks Riccardo.
TGGP, OK, but maybe then just reduce it.
11. February 2021 at 14:33
Scott,
Very interesting ideas, but your comments also sound kind of amazingly similar to socialist output control fantasies. No? You will say no, okay, I get it, but there’s some truth to it.
You recent entry reminds me of a very old blog post of yours where you make fun of how much money Europeans and Japanese spend on food and that the percentage of people employed in agriculture is still supposed to be much larger than in the American agricultural industry.
And your conclusion was (more or less) how “effective” the American agricultural industry was working and how ineffective the European and Japanese ones were.
And the commenters were like, “Scott, when was the last time you ate American food, and then French, Italian, or Japanese. What the average American eats in comparison is total junk”.
So how do we know which output is good and which is bad? What objective criteria should there be?
I mean, maybe Americans want to spend 13% of their GDP on health? It’s at least a possibility. What’s more important than health, they might say to themselves.
And what’s suddenly wrong with yachts?
And if one reads your text carefully, then the income tax is not the problem, but actually only the income tax deduction. So what, get rid of the income tax deduction.
11. February 2021 at 15:16
The reparations question is certainly not as simple as Tacitus makes it out to be; historians’ opinions still differ widely until today.
Perhaps it would be better to ask what kind of role the reparations play at all in the end. Simple question: what would actually change if the reparations were doubled, halved, tripled, set to zero? – Nothing would change. We would still have an emerging wannabe world power (much like China today) whose place in the world has not yet been determined.
An arrogant, brutal ogre, at least in the eyes of its opponents, who wants to sit at the table of the greatest nations, or better yet at the throne, but the others are reluctant to let it sit down, for understandable reasons.
Seriously, what would change. The world economic crisis would still break out, mass unemployment would come and so would Hitler. Nothing changes really.
The same is true of the US intervention, which (as always) begins long before 1917. American banks ultimately finance England and France, and then what, then they just let go? Again, even in the event of a stalemate, not much would change: Germany’s place in the world would still not be determined, its world power aspirations would not be satisfied, and the Great Depression (and thus Hitler) would not have been prevented.
11. February 2021 at 18:53
Postkey:
I think the article you linked raises an important point: with the pandemic shutting off most of the consumption outlets for the wealthy we ended up inflating the net worth of the ultra-rich using debt-financed government money. The wealth of the richest 10 billionaires, for example, increased close to $600 billion during the pandemic.
I don’t, however, like the proposed “one-off” wealth tax solution. I don’t trust the “one-off” aspect of it. Why not instead take this opportunity to start to reverse Scott’s policy lowlight #2, the income tax. It might be a good time to switch to a consumption tax like he suggests as those whose wealth was inflated by debt-financed money start consuming again. (I’m not on a soak-the-rich campaign; I include myself among the millions whose wealth was increased by the debt-financed money since I owned the stocks of many of the companies of the ultra-rich.) Personally, I’m partial to a land value tax which is less distortionary than either consumption or income taxes but I don’t think there’s been any appetite for land value taxes since the time of Henry George.
12. February 2021 at 05:41
WWI still remains somewhat—-actually more than somewhat——of a mystery to me. One of the more intriguing ideas is how bad communications were——as if all actions were taken on very lagged information.
Certainly even a week before the Archduke was killed——itself a comedy of mutual errors——the idea that War was on the horizon was not in anyone’s mind. The Hapsburgs let their “protectors”, Germany, goad them into war as the latter believed they saw an opportunity to move “East”. The French, presumably unaware the Czar was on his last legs, felt obligated to a treaty—-maybe they too saw an opportunity.
I did not know it was questionable that our entry into the war “tipped” the balance——I have assumed it was obvious that it made all the difference in terms of who won.
The “pre-Bolshevik” revolution of Feb 1917 (later taken over by Lenin and the Bolsheviks) had the Czar step down——thus eliminating them as a force in the war as Russia wanted out. Then the before the Armistice, the Hapsburgs and the Kaiser were overthrown. Armistice was a ceasefire not a surrender.
Versailles was a negotiated settlement. I always assumed the new Governments had no clue compared to French/Britain/US. But the Treaty was not obeyed and its economic impact was less than feared.
Germany did start the war in my view—-but by the end it was a mess. Without the US, it would have lasted longer and they still would have lost.
How they ended up with Hitler is beyond me. The only thing that makes sense to me is they were far more politically astute.
So, while Wilson “did things”, and Germany became monstrous, the cause and effect hypothesis of Scott, while interesting, is highly speculative.
12. February 2021 at 05:43
The US entry made all the difference in the timing of who won——not who won—-is what I meant to say above
12. February 2021 at 06:43
Funny, first comment from “Goldhammer” on #6 – Im reading Winston Churchill’s account of WWII and Goldhammer’s comments seem to be correct – from what I have been reading. Id also add the treaty of Lacarno in there as well that Germany had been violating since the early 20s. Churchill makes the point that had the US used its influence and power in the 20s and early 30s it could have led a coalition against a rearming Germany, among other policy errors of the other European governments as well. Overall though, as Goldhammer above states, its complicated.
12. February 2021 at 06:44
I mean funny because I happen to be reading about this right now.
12. February 2021 at 07:24
@Christian List: You know, I was kinda thinking the same thing. Ultimately, maybe nothing prevents it.
@Sumner: I still really like this post and agree with most of it and always thought it was a really bad decade. Very interesting topics.
12. February 2021 at 09:19
I agree with the claim that US entry into WWI changed what would have been a draw into an Allied victory. Had the US withdrawn its financing, the British and French would not have had the money to continue. Russia had collapsed. The last large offensive on the Western Front before the Americans joined in earnest, the Battle of Arras, had ended up a costly stalemate. Much of the French infantry had just mutinied against further offensives.
12. February 2021 at 10:19
No, sorry, Christian, but scholarly consensus today is pretty unanimous that the Versailles reparations were not excessive. This has been the consensus for 20+ years now.
12. February 2021 at 12:27
Christian, You said:
“your comments also sound kind of amazingly similar to socialist output control fantasies.”
You reading comprehension is amazingly similar to alt-right nuts like Xu, Bob and Sarah.
Of course I favor a free market in health care; our actual system is massively regulated, distorted and subsidized.
Joe, You said:
“Churchill makes the point that had the US used its influence and power in the 20s and early 30s it could have led a coalition against a rearming Germany,”
He’s right. NATO came a few decades too late to prevent WWII.
We should have either stayed out of Europe or stayed in (as after WWII). It’s the intervention plus withdrawal that was so massively destructive.
12. February 2021 at 15:18
–“As far as the income tax, most of the harm done is not from the work disincentives (I favor a progressive consumption tax, which has basically identical work disincentives.) It’s not even the bias against future consumption (which hurts high savers like me.) Rather the biggest problems are the distortions it creates, the things people do to avoid paying taxes.”–
Scott, this seems to imply that a progressive consumption tax wouldn’t also have people doing things to avoid the tax.
How would you structure a consumption tax which avoids this feature of the income tax?
I recall a few years ago about you talking about a payroll tax, which is functionally the same. That would probably help limit the ability for people to avoid it, but realistically it probably has no chance of ever becoming tax law as it will be perceived to be unfair (e.g. Bill Gates now doesn’t even have to pay taxes on his Microsoft dividends and he’s still buying stuff).
12. February 2021 at 15:23
–“Most people have a “follow the money” approach to economic analysis, whereas you actually want to follow the output. All the labor and materials going into that wasted 13% of GDP (above Singapore’s 5% of GDP) could have been used to provide average Americans with better housing, nicer cars, more restaurant meals and more trips to Disney World. Because we produce lots of medical goods that don’t make us happier, our living standards suffer.”–
Do we use dramatically more resources for health care than Europe (I think with Singapore the answer is probably yes, so let’s use Europe which spends a lot less than the US as % of GDP in dollar terms).
I recall seeing lots of measures of resource input for health care in the United States and most of it isn’t that different than other developed countries. Similar numbers of hospital beds, doctors per capita, nurses per capita, etc. Maybe a bit more medical equipment perhaps, but it seems hard to believe it would be worth many hundreds of billions of dollars in extra cost.
From that perspective, perhaps we aren’t using too much in the way of resources for health care but American health care providers collect higher nominal rents for their services than elsewhere. It’s not a surprising result when we, as ASK says, subsidize demand and restrict supply.
13. February 2021 at 09:08
Justin, It’s difficult to separate labor and capital income for owners of companies, but it’s very possible that Gates would pay much more tax under a progressive consumption tax—it depends how you partition the owner’s income.
For instance, I’d close the carried interest loophole for hedge funds, as that’s basically labor income.
And yes, we use more resources than in Europe. I’ve been to the doctor in the UK and it’s far more bare bones than in the US.
And even if its “rents”, those represent waste because people will waste resources in rent seeking. Look at all the hoops people jump through here to become a doctor.
15. February 2021 at 16:16
Nice post. Perhaps the U.S. has been in steep decline since 1914. We got lucky to come out of WWII on top (economically and morally), but besides that it’s all been roughly downhill.
I think too many intellectuals and especially economists these days are concerned with fighting over “data” rather than fighting over principles, which are now often viewed as “simple minded”. It’s hard to overestimate the importance of simple, broadly distributed ideas. I’d like to see a return to an economic reasoning that aspires to be broadly distributed.
16. February 2021 at 05:52
While I agree, I’d want to defend the 1914 Harrison narcotic act.
The opium business was deadly, and brought China to its knees.
The legislatures were concerned that similar abuses, and that specifically drug dens would become common in the United States.
Furthermore, we can already see the effects of sugar (much less intense dopamine high) on US citizens, to the extent that they are nearly disabled from the sugar drug (obesity).
For a society that already embraces the unruly gangster culture, one cannot even conceive of the degeneracy that would ensue should opium dens be permitted.
16. February 2021 at 15:51
Cartesian, I agree with “free markets are usually best”.
ankh, The US did just fine for 140 years without drug laws. In any case, these laws don’t stop drug addicts.
And the drug laws are a big cause of the “gangster culture”, as they make drug dealing highly profitable. When alcohol was banned (1920-33), the gangster culture took over the alcohol industry too. After Prohibition was repealed, the murder rate in America fell in half.
16. February 2021 at 19:45
Damn, Sumner – you sound like an Austrian!
(I haven’t read you for several years – monetary policy is tiring.)
#Six could use refinement – the occupation of the Ruhr valley, the capital flight circa 1922 (to the US).
The war was essentially over by the time that the US went in. Mutinies everywhere. Russia was out. Sergeant York capturing hundreds of Germans – who were surrendering, no doubt. Tanks were getting serious. The UK was about out of young men to sacrifice. Sunk costs fallacy.
Germany v France always reminds me of my visit to Napoleon’s Tomb. In came a field trip group from France and one from Germany. They converged. The tour guides got into it. Two females just about came to blows. The schoolkids were running for the exits. German guide must have questioned why France honors a war-monger.
What really irritated Keynes, et al, was that the US wouldn’t let the UK off the hook for the war loans.
All very sad. Especially given that men’s fashions reached a pinnacle in the Edwardian period – even the Teddy Boys thought so!
Wilson was a Democrat, correct?
17. February 2021 at 03:48
Interesting that you mention EC101 shortly after mentioning Noah Smith. He’s written extensively about the problems with relying on the simplistic lessons of many EC101 courses, while ignoring the conditions under which they don’t apply, modern empirical research, etc.
So of course you should understand EC101, but you also have to understand its limitations. Too many politicians are stuck in a free market uber alles version of 101.
17. February 2021 at 09:11
Theo, Yes, a Democrat.
Foosion, Yes, but in the specific example I cited it really was an inability to understand EC101.
If you say you want to tax the rich but don’t want them to consume less, then what am I to think?
18. February 2021 at 19:10
Ben Strong died in 1927, Bernanke took over fom Greenspan in 2006. The Fed’s strucuture may have changed over time, but the hand over failure seems the same …